Confusion about the requirement to register

Over the years, I've heard this many times: "Why should I have to register for VAT in Germany for our annual congress? The revenue is collected in a bank account in the USA and we are a US-based association."

To answer, I always give a very simple example. Let's say I go to Japan and purchase a ticket to go see the recent Sky tree tower observatory. When the invoice shows the local consumption tax, I can't say: But I am based in the USA, I'm not liable for Japanese sales tax.”

The reality is that the service sold to me is rendered in Japan so Japanese sales tax will apply no matter who is purchasing the service.

Obviously, each country has its own set of rules on what else triggers the requirement to register or not for the local sales tax regimes. Some countries have a set threshold of yearly taxable sales, some don't even allow non-established entities to register and claim back any sales taxes.|

But to assume that your association's headquarters geographical location or where the revenue is deposited dictates the requirement to register or not, is simply false.

Your association's FX needs

Since your association holds meetings abroad, you most likely face currency exchange issues. This depends on what currency you are invoicing participants with. 

For example, if you collect registration revenue in USD running up to the event, you will need to remit the VAT on these sales to the local government. This payment has to be made in the local currency (EUR, GBP, JPY, etc.). Local suppliers for the event will usually be paid in local currency as well. 

All this movement of money can incur costly currency exchange costs. There are a few possible solutions to this problem.

1. collect registration revenue in the local currency: This is the most obvious solution, but most often not the easiest as your local bank, credit card provider and such, might not be able to handle foreign currency transactions. If they do, they probably charge onerous sums for the service.

2. Collect part of the revenue in local currency: Some clients chose to collect sponsor and exhibitor revenue in the local currency. This creates a fund from which suppliers and foreign governments can be paid out with. Often the best way to do this is to open a bank account in the host country. The downside of this process is lots of red tape, forms, etc. to actually open the bank account. Keeping track of this foreign account can put an added burden on your staff as well.

3. Using an FX provider: Much like buying milk at the corner at a higher price out of well, convenience, letting your bank handle all your FX needs can seem convenient. The reality is that you are probably paying 50-150% more for the conversion costs. This amounts to a possible saving of 1 to 2 percent of the converted amounts. Needless to say, this can add up quickly.

Bottom line: Associations have a million things to take care of when holding an event abroad. Currency exchange might not be top priorities, but dealing with the right provider can ensure painless and consistent savings on all your FX transactions.

Registering for VAT...on time!

If you read online guide for VAT registrations from various sources, you can read that registration can take as little as a few weeks in some countries. This can be very deceiving, as in many cases offical documents such as certificates, certified identification documents, apostilles, etc, are required and can take weeks if not months to requests. For example, the IRS has a current turnaround time of just over 3 months to issue 6166 certificates.

So its best to plan ahead and start the process as early as possible. 

Is registration required?

This is the most common question that is asked to me. Obviously the answer isn't completely black and white.

To start, the requirement changes from one country to the other. Generally speaking, there are 3 categories:

1. Registration not possible: Some countries just don't allow non established entities to register for VAT. Some special incentive programs might be in place for professional meetings (such as in Cancun Mexico).

2. Registration possible but not required: Few countries fall under this rule. Japan for example requires registration based on the past two fiscal years if a certain threshold of sales has been met. So for one time events, registration isn't required. Obviously, if you aren't registered you generally can't claim the taxes back on expenses. Effectively, leaving money on the table.

3. Registration required. Most European countries and Australia require registration with or without a set threshold. Once registered your association will have to collect sale taxes on sales and will be allowed to claim back all the sales taxes paid out on expenses.

We can assist your association to determine the sales tax liabilities in a given host country so your board of directors or members can make an informed choice.

Changes to the Canadian tour package incentive program

The Canadian authorities have modified the current tour package incentive program as of the 22nd of March 2017:

"Under proposed changes, a GST/HST rebate is no longer available to non-residents for the Canadian accommodation portion of eligible tour packages under the Foreign Convention and Tour Incentive Program if the accommodations are supplied after March 22, 2017. However, the rebate may still be available if the accommodations are supplied in 2017 and the amount owing for those accommodations is paid in full before January 1, 2018."

Accomodations sold by the conference organizer of an eligible foreign conference may still claim the taxes paid. Consult a tax specialist to find out how.

Italy: Whats the rate going to be?

If you read around the web, it might seem like Italy will increase its VAT rate in 2018. The fact is the government has stated that it will increase the standard VAT rate from 22% to 25% on the 1st of January 2018. Despite this, the increase remains uncertain as past planed increases have been cancelled. We would advise caution and to be ready to for a possible change in early 2018.

South Africa: Getting VAT invoices from your suppliers

South African authorities have strict rules for what constitutes a valide VAT invoice. The "invoiced to" name must be exactly the same as name that appears on your business registration with the South African government. We recommend that supplier contracts reflect the correct name to enable them to issue correct invoices. There are two sets of requirements depending on the invoice amount:

this is required where the supply (including VAT) exceeds R5000

Contains the words “Tax Invoice”, “VAT Invoice” or “Invoice”
Name, address and VAT registration number of the supplier
Name, address and where the recipient is a vendor, the recipient’s VAT registration number
Serial number and date of issue of invoice
Accurate description of goods and /or services (indicating where applicable that the goods are second hand goods)
Quantity or volume of goods or services supplied
Value of the supply, the amount of tax charged and the consideration of the supply (value and the tax)

Note: all seven criteria must be met for the invoice to meet the requirements of a Tax Invoice

where the supply (including VAT) is greater than R50 and less than R5000

Contains the words “Tax Invoice”, “VAT Invoice” or “Invoice”
Name, address and VAT registration number of the supplier
Serial number and date of issue of invoice
Accurate description of goods and /or services
Value of the supply, the amount of tax charged and the consideration of the supply (value and the tax)

As with all countries, it's paramount that you receive a valide VAT invoice so that the VAT paid out can be claimed back in the periodical VAT returns.

Ireland VAT filing periods

Most countries require monthly or quarterly VAT returns to be submited to the tax authorites. Ireland charts its own course in this respect. The standard reporitng period is bi monthly, 6 VAT returns per year. For entities with less than 14,000 EUR of yearly VAT turnover, triannual VAT returns are possible, 3 VAT returns per year. In both cases, the VAT returns will need to be submited by the 23rd day of the follwoing month after the end of a period.

2018: Saudi Arabia VAT

It has been confirmed that Saudi Arabia will impose a 5% VAT on certain goods and services. The full scope and impact isn't known yet. Further details will follow before next years implementation.

Norway: New daily penalties for 2017

From 2017, the Norwegian tax administration have the possibility to issue daily fines for late submission of reports, which should be reported to the tax office. 

Penalties for late submissions can be issued for the following reports:

·         VAT returns
·         Tax returns (air passenger tax, environmental tax, etc.)
·         A-melding (salary reports)
·       RF-1199 (contract reports)
·       Annual returns

The daily fines are NOK 524,50 (maximum of NOK 52 450 in total).